Extra costs to battery producers

Posted on 2nd October, 2009

The approval of seven battery compliance schemes this week will add an estimated £1,000,000 to the costs for UK Producers, compared to the impact assessment previously released by the regulators.

Originally, the EA stated that the sum required by the regulators in order to manage the Battery compliance directive in the UK was around £670,000.

The result of approving seven schemes will be that the income generated for the EA will now be around £1 million pound, far exceeding that required to meet their costs.

Add to this the additional administrative costs of operating 7 independent schemes and the potential for 7 collection networks competing for the same batteries, the additional costs to producers and eventually consumers could well exceed £1 million or £330 per tonne of batteries collected in 2010.

Based on the anticipated sales for 2010 of 30,000 tonnes, with a 10% collection target there will be an obligated tonnage of 3,000 tonnes to fund. Therefore the effect of this added cost will increase producer costs by as much as £330 per tonne. This is on top of the expected £1,000 per tonne average cost of compliance.

This is not believed to be a deliberate overcharging by the EA for profit, as all viable scheme plans had to be approved. We do however now have a situation that needs to be addressed as a matter of urgency in order to avoid an unnecessary additional cost burden being passed on to Battery Producers.

With only two weeks to go for producers to decide on the right scheme, sadly it falls to producers to solve the problem.

They firstly, need to make sure the scheme they join is guaranteeing the cost of compliance for 2010 and beyond. They need to avoid the trap of signing blank cheques. As has often been the case with packaging and weee, many schemes are not confirming costs until the evidence is posted, leaving the producer to take all the risk.

The producer also needs to make sure their scheme has a viable low cost collection service in place to secure the evidence. Some schemes are trying to form alliances which are untested and currently uncosted. If the scheme is not viable in the long run the cost will inevitably fall to the producers.

BatteryBack has focused on developing a national collection network first. With currently over 3,500 collection points already established, BatteryBack is able to quote firm prices for the next three years and is already aware of the challenges ahead.

Peter Hunt Chairman of BatteryBack explains

“we need competition in this sector but too many schemes brings as many problems as too few. Three to four schemes would ensure healthy competition in what is expected to be a £2.5 – 3 million cost to all UK producers for 2010 compliance. Seven schemes brings an additional burden of over £1 million in costs per year”.

By guaranteeing both compliance and costs, BatteryBack is convinced its members will not get a shock from battery compliance.